Wachovia to Merge with Wells Fargo Instead of Citigroup

After last Monday's press releases including this one from the FDIC, it looked like Citigroup's acquisition of Wachovia banking operation was a done deal. It turns out not to be the case. It was just reported that the Citigroup deal is dead, and now Wells Fargo will merge with Wachovia. This merger involves all of Wachovia's operations including its banking operations, its brokerage business and its investment management division. Also unlike the Citigroup deal, this one will require no financial assistance from the FDIC.

Update: It looks like Citigroup is not happy with this turn of events, and they're demanding that Wachovia abide by the terms of its earlier deal in which Citigroup would buy Wachovia's banking operations (see article at Yahoo Finance).

I hope that Wells Fargo doesn't get infected by Wachovia's lack of ethics.

NYTimes April 25, 2008:

The Wachovia Corporation, the banking giant, has agreed to pay an estimated $144 million to settle federal accusations that it failed to block telemarketers who took advantage of thousands of elderly bank customers...

NYTimes February 6, 2008:

Last spring, Wachovia bank was accused in a lawsuit of allowing fraudulent telemarketers to use the bank’s accounts to steal millions of dollars from unsuspecting victims. When asked about the suit, bank executives said they had been unaware of the thefts.

But newly released documents from that lawsuit now show that Wachovia had long known about allegations of fraud and that the bank, in fact, solicited business from companies it knew had been accused of telemarketing crimes.

Internal Wachovia e-mail, for example, show that high-ranking employees at the nation’s fourth-largest bank frequently warned colleagues about telemarketing frauds routed through its accounts.

Documents also show that Wachovia was alerted by other banks and federal agencies about ongoing deceptions, but that it continued to provide banking services to multiple companies that helped steal as much as $400 million from unsuspecting victims...

They are doooooomed I tells ya! Doooooomed!! Citi is doooooomed!! Wells-ovia i dooooomed!!! Chase is dooooomed!! Doooooomed Dooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooomed!!!!

The worst thing about all of this is the big just get bigger. Competition will go down and so will savers rates. Welcome back to the monopoly game we all played as kids.Thank goodness for credit unions and some of the smaller banks that have managed to keep out of the sub prime mess.